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Aust tourism 'could be hit by China govt'

Stuart Condie

Australia's tourism industry could be in for a shock if the Chinese government tries to get the country's increasingly affluent middle class spending their cash at home rather than abroad, a prominent economist has warned.

Former Morgan Stanley chief economist Andy Xie told a tourism industry conference in Sydney there is a chance China's communist rulers, reluctant to cut taxes, could erect barriers to overseas tourism in an effort to boost domestic spending.

That could have huge consequences for Australia, which received more than a million Chinese visitors in the last financial year.

"Chinese people spent two trillion renminbi overseas last year, that's like $US300 billion ($A400 billion), and some people think `if this money was spent in China, it would help us, right?'" Mr Xie told Thursday's China Uncovered event.

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"Especially when they spend it in Japan: `that's our enemy, what's going on?' So if that happens, this is going to be very bad."

But Mr Xie said he remained optimistic about the long term health of the Chinese economy, and the boost that would give Australian tourism.

"In the short term, we need to be a bit cautious and we know the market is going to change, but in the long term we can all be very positive," Mr Xie said.

An IBISWorld report in November said Chinese travellers outspent visitors from the United Kingdom by 50 per cent in the last financial year, while the lower Australian dollar is helping boost spending by overseas tourists.

Mr Xie stressed that the type of experience and entertainment Chinese tourists look for in Australia will change dramatically over the next few years.

"It's not going to be old people in a bus, eating instant noodles, checking into the LV (Luis Vuitton) shop and clearing the shelves. It's going to be different."

Mr Xie agreed with industry experts who say Chinese tourists visiting Australia are going to be younger and more independent than those of past years.

"Don't base all your plans and your 10-year investments on the old guys, because the young guys are coming," Mark Tanner, the managing director of China-focused marketing agency China Skinny, told the conference.